Malta Backs Down on Foreign Licence Reform

The Maltese government is withdrawing its reform of the recognition of foreign licences following objections from the industry. Even so, officials have accepted that new legislation in the sector may still be required. The reform was launched under the national AML and CFT strategy, and a consultation with the relevant stakeholders was opened in April.

Under the current rules, Malta-based gaming companies can operate on the island with licences issued by regulators in the EU or EEA, or by certain countries whose AML rules are considered "largely equivalent". This permission is known as the Recognition Notice, or RN for short. Holders of an RN, both B2C and B2B companies, can operate without obtaining a separate licence from the Malta Gaming Authority. As a result, many companies on the island operate with a Romanian licence, for example.

The national risk assessment prepared by the state in 2023 rated the risk of this regime as "medium-high". According to the assessment, the main threats are operators working with a foreign licence without an RN, and the possibility that a foreign licence is subject to weaker supervision. Because the system relies largely on companies' own declarations, these gaps are not easy to detect.

Some sources argue that the regime is being used as a loophole, particularly on the B2B side. One source cited Romania's ONJN authority as an example, where obligations are effectively lighter and there is little interest in activities abroad. According to the information reported, the large majority of RNs are linked to Romania.

The risk assessment states that, as of 2021, 111 gaming companies incorporated in Malta were operating under an RN, and 46 of them were B2C operators.